Suez Canal Authority coordinating with clients to mitigate impact of Red Sea tensions: Rabie to MSC Group

Baheya Wael , Wednesday 14 Feb 2024

Chairman of the Suez Canal Authority (SCA) Osama Rabie affirmed ongoing coordination with clients to minimize the impact of the Red Sea tensions during a meeting on Wednesday with Soren Toft, the CEO of MSC Group, one the world’s largest container shipping company.

SCA
Chairman of the Suez Canal Authority (SCA) Osama Rabie during his meeting with CEO of MSC Group Soren Toft and other officials from the MSC group through Video conference. Photo courtesy of SCA.

 

“We are keen on continuous coordination with our clients to reach joint work mechanisms aimed at reducing the effects of the current crisis on global supply chains,” Rabie told Toft.

The videoconference meeting addressed developments in the Red Sea and Bab Al-Mandab region, examined MSC's navigation strategies in the Suez Canal, and worked towards mitigating the repercussions of the prevailing crisis on global supply chains.

CEO of MSC Group Soren Toft affirmed the group's readiness to resume crossing the Suez Canal once security conditions stabilize, after having suspended crossings in December. 

“We intend to inject more investments into promising logistics projects in Egypt,” he added.

During the first two weeks of January, ship traffic in the Suez Canal decreased by 30 percent compared to the same period last year.

This came amid tensions between Western powers and Houthi rebels in Yemen who have been targeting Israel-linked vessels in solidarity with Gaza.

In recent weeks, the US and the UK have conducted airstrikes against various Houthi targets with the Yemen rebels responding with targetting of American and British ships.

The number of vessels passing through the Suez Canal dropped to 544 in the first two weeks of January, down from 777 in the same period of 2023, Rabie stated at the time.

He added that the dollar revenues from the Suez Canal have decreased by 40 percent and the loads shrank by 41 percent during the same period.

An estimated 12 percent of global trade passes through the Red Sea annually.

Some ships are now steering clear of the Red Sea and taking the lengthy detour around the Cape of Good Hope, which adds around 3500 nautical miles (6,500km) and 10-12 days sailing time to each trip, requiring more fuel.

Meanwhile, Charles van der Steene, the regional president for Maersk North America, the second-largest global ocean carrier, expressed his concern about Red Sea tensions persisting until the end of the year.

“We don’t see any change in the Red Sea happening anytime soon,” he stated to CNBC.

In January, seven of the biggest shipping companies including Maersk suspended their vessels passing through the Red Sea as a result of Houthi attacks and the US-UK counter strikes.

At the time, Rabie stressed that the decision of some shipping companies to reroute from the Suez Canal is a temporary measure driven by security concerns amid the ongoing escalation in the Red Sea, emphasizing that the impact is not only on the Suez Canal but the entire world.

He moreover stated that the Suez Canal is safer and more cost-effective than the journey around Africa’s Cape of Good Hope.

Search Keywords:
Short link: